Bitcoin has been hailed as the payment system of the future. It is faster, less expensive to maintain, and a lot more secure than the systems we currently have on hand. It has even helped create a whole new way for people to make money – through mining.
It is the miners that actually make the system work so well. They have specialized rigs that enable them to solve the complex algorithmic hashes attached to transactions and so ensure that they are valid. For their efforts, they earn cryptocurrency.
It is something that has, in the past, meant big bucks for the miners. Depending on the processing power of your machine, you could be in with a chance when it comes to solving the equations first and so earning the cryptos.
The miner then has three choices:
(1) Find one of the reputable cryptocurrency exchanges and exchange coins for fiat currency.
(2) Use the coins or send them to someone else.
(3) Hold onto the coins in the hope that the value will increase.
If miners were not paid for the efforts, there would be no point continuing because the process is very energy intensive. It’s something that you need to consider before you decide to become a miner – your energy bill is going to go up quite a lot.
In fact, it is this excessive energy requirement that has become a real cause for concern when it comes to the more widespread adoption of cryptocurrency systems in general. Did you know, for example, that Bitcoin transaction could use as much as four times the amount of energy that it would if it were a credit card transaction?
The problem is that there is a lot of redundancy built into the system – every miner within the network is attempting to solve the problem, but only one will be rewarded for the effort. That means there is a lot of duplication when it comes to the work done.
It is bad news for the world’s energy reserves with miners collectively using more electricity than 159 countries globally. Check out our infographic for more information.